Pompeo takes Indo-Pacific vision to Mahathir's Malaysia

KUALA LUMPUR (Reuters) - U.S. Secretary of State Mike Pompeo began a four-day visit to Asia to promote a U.S. vision of transparent, private sector-led investment with a stop in Malaysia, which has ordered a review of the sort of massive Chinese projects Washington questions.

U.S. Secretary of State Mike Pompeo arrives at Royal Malaysian Air Force base in Subang, Malaysia August 2, 2018. REUTERS/Lai Seng Sin

He will meet Malaysia’s 93-year-old prime minister, Mahathir Mohamad on Friday morning, to congratulate him on an unexpected May election victory that returned him to power on a pledge to clean up government.

Mahathir had an often scratchy relationship with the United States and other Western countries while Malaysia’s longest serving prime minister from 1981 to 2003. However, though he often lambasted their supposed hypocrisy, underlying cooperation in areas ranging from business to security ran deep.

Pompeo is the most senior U.S. official to visit Mahathir since his election and will be looking to the present, a senior U.S. State Department official told reporters traveling on Pompeo’s plane.

“He will congratulate Mahathir,” the official said. “Secretary Pompeo is arriving in Kuala Lumpur with 2018 in mind. There’s a long history in both countries. We have a comprehensive partnership with many areas of cooperation.”

He said the meeting would be an opportunity to talk about the Trump administration’s Indo-Pacific strategy and a vision for an “open, transparent, rules-based region” that Pompeo outlined in a speech in Washington on Monday.

U.S. officials say the strategy does not aim to compete directly with China’s massive Belt and Road Initiative, which involves dozens of countries in an estimated $1 trillion of mostly state-led infrastructure projects linking Asia, parts of Africa and Europe, but rather to offer a more sustainable alternative by encouraging private-sector investment.

This may strike a chord with Mahathir, who has called for review of several projects signed by his predecessor Najib Razak, who is under investigation in Washington over the scandal-ridden state fund, 1Malaysia Development Berhad.

Mahathir has said Malaysia will renegotiate a $14-billion deal for a domestic rail project that is being developed by Chinese companies, saying the terms are damaging for Malaysia. He has canceled a high speed rail link with Singapore for now.

At the same time, he said his government would welcome investment “from China or any other country” if companies were willing to commit to projects that would create jobs for skilled workers in areas like technology and research and development.

Perhaps less welcome for Mahathir, who is expected to visit China from Aug. 17 to 21, will be President Donald Trump’s aggressive trade stance in Asia, which has seen him launch a trade war with China and take aim at allies and partners too.

“In line with our president’s objectives, it’s a trading relationship we are hoping can continue to be free and fair and we can bring about some balance to the trade deficit we have with Malaysia,” the senior U.S. official said.

Murray Hiebert, a Southeast Asia expert at Washington’s Center for Strategic and International Studies, said Pompeo’s Kuala Lumpur stop would be largely a “meet and greet” to rekindle an old relationship.

“He says he wants to be more firm on the South China Sea and to renegotiate these projects with the Chinese and there might be some opportunity for the U.S.; so I think Pompeo just wants to get a measure of the man and see what they can do.”

Malaysia is one of the several territorial rivals in the South China Sea, which China claims in its entirety. Among the security issues Pompeo is expected to discuss in Singapore and on a following stop in Indonesia are what Washington and its Asian allies see as China’s excessive territorial claims.

Reporting by David Brunnstrom; Additional reporting by Praveen Menon and Rozanna Latiff; Editing by Clarence Fernandez